EE SERIES BONDS HELP AID COLLEGE FUNDING
DEAR BRUCE: When our children were born, we started purchasing Series EE bonds to have for their education. Once the 529 plans came into existence, we stopped purchasing bonds and put our funds into the 529 plans.
My oldest son has completed his freshman year of college and the funds in the 529 plan were applied for his entire first year. We now want to use the bonds to pay for his next semester.
I have always heard that if they are used for education, there should be no or very little tax implications of cashing them in. They are in my wife’s and my son’s names as her “or” my son. Most all have matured. Can you shed any light on the tax implications of doing this? — J.M.
DEAR J.M.: If the money is being used for educational purposes, there will be no taxes due upon cashing in the bonds. As they are in your wife’s name or your son’s, you should have no difficulty.
The best place to begin is with your local bank. It can take care of this for you, although, it doesn’t have any obligation to help you, as it once did.
DEAR BRUCE: Does the government insure money market funds or does the broker/investor? — Reader
DEAR READER: Some money market funds are invested in ways that are insured by the federal government, but there are many exceptions, so be certain you know what the exceptions are. By and large, it should be very clear, and it will be made clear by the seller of the funds, who is responsible in case things go bad.
DEAR BRUCE: Can I claim relocating expenses paid by my employer when tax time comes around? — Harry
DEAR HARRY: Your notion is an interesting one — claiming expenses paid by your employer to get a tax refund. The only problem is, it doesn’t work that way.
If you are receiving some type of benefit from your employer regarding moving expenses, by all means you must show that as income, and of course, the expenses that you paid as offsets. Anything that you are paid for relocating must be accounted for when tax time rolls around.
DEAR BRUCE: What is an RLT? — Bill
DEAR BILL: An RLT is simply a revocable living trust. It means that a living trust has been established, but you can revoke it at your pleasure. Whether or not this is a viable approach for you is another matter.
I have talked to several people who assure me that it’s a generally good notion. In my opinion, before you establish a trust, you should sit down with the individual who is going to set up the trust and have him explain the pros and cons, and be certain to look at the minuses very carefully before you make a decision.
Send questions to bruce@brucewilliams.com. Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.
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